Need GC to be licensed for rehab job?

10 Replies

I found a GC contractor reference for a flip I have in works who is reasonably priced. The referral was glowing and the people apparently have used him for 20 years on a bunch of rental properties they own. I asked him for his license and insurance and suddenly he shy's away and I don't hear from him. I assumed I needed them to be licensed for my protection (for disputes I can go through the state), but is that the only reason to hire licensed guys? I really don't see the need, especially if they can just close down shop and open a new Co next year with a new license, or does the state prevent that? I've had a crappy GC before who was licensed and all that, I never ended up filing a complaint because I just didn't want to deal with it in the end. I also understand being bonded is a good idea, but probably much less small guys have that. 

So really, as far as I can tell what's most important is that they have good references, you can see their past work, and they have an insurance policy covering them and anyone they hire. I have an insurance policy for my flip also, maybe I would add coverage for them and hire them through my LLC?

I'm obviously trying to stay low cost here as it's a flip and use a more lean contractor. For some of the more critical stuff like floor leveling I will use a specialist company. GC would hire electricians etc and I presume they would be licensed also, I can demand it in our contract also I suppose. 

As far as permits go, I know you don't have to be licensed to pull them (when the last GC I had messed up everything, I removed him from the permits and took them over in my name), but definitely makes sense for the contractor to be on the permit since they will be dealing with the inspector, correct? One downside I experienced there was that the contractors guys kept failing inspection and even closed up the walls not knowing the electric failed. They never told me this and I probably burnt a half week or more of labor hours billed because I didn't know they were f'ing up. 

I’m sure there are some people on here that will disagree with me. But if you’re trying to save some money and don’t want to hire a GC, hire him. Just make sure he has insurance and workers comp or at least an exemption on all his guys. For all of the items that require a permit hire those trades separately.   There are a lot of contractors out there that are not state licensed Gcs and they do better work than some with a license.  It also depends on what is being done to the home and what your state requires.

@Leland Smith I kind of second what @Gary Siver said........ sometimes there are contractors that aren't licensed that do better work and are more reliable than licensed, that being said that's not all that i would worry about....

If you are doing any structural work, I would recommend you get someone licensed that can pull the permits or pull them yourself if they let you (its just better when you can justify at sale all the work was permitted and for tax purposes, you can have records of money that was paid out) ..... For this, at least in my area, if I am the owner occupant I can pull the permits myself  without a contractors license, even for some light plumbing and electrical work. As soon as they know its a flip though, they want anyone that pulls permits to be licensed. 

I will never tell anyone to not pull permits because I think its important do be able to show everything was done to code and right specially at selling time,  but if you are doing the work yourself or hiring out and aren't doing structural or major reno to the property then i don't know if you necessarily need to pull permits but do or make sure the job gets done to code and right. 

Either way you go, make sure all work is done right and always get lien release waivers. You don't want any surprises at the end. 

@Luis Sosa Thanks for the reminder on the lien release waiver! I forgot about that. I will probably want to install can lights and I know that can be a problem because then they want you to run separate lines to the electric box. For electrician or plumbing or structure I agree, I want a licensed guy there to make sure it's code. For foundation I will hire a licensed co. Unsure if siding work needs permit, but I know removing asbestos does so if I end up going that route (I hope not) then I'll make sure they get permits. You don't have to be licensed to get permits, as I mentioned I pulled permits myself.

@Leo Poon permitting and requirements are so area specific his answer would have no bearing on what you need to do (unless you invest in his area). Permitting can even be town specific. He probably was able to pull a permit as he was the property owner. I have always been able to on my owned homes. Letting anyone pull one may not be the case. It's best to know before you decide who to hire.

@Leo Poon We essentially took over the building and electrical permits from the contractor and put them in our name. We hired the appropriate contractors, in this case electrical and a handyman for plumbing, to finish the job according to what the inspector told us he had told the prior GC. The rough in inspection was already passed so the walls were closed.
Originally posted by @Brian Pulaski :

@Leo Poon permitting and requirements are so area specific his answer would have no bearing on what you need to do (unless you invest in his area). Permitting can even be town specific. He probably was able to pull a permit as he was the property owner. I have always been able to on my owned homes. Letting anyone pull one may not be the case. It's best to know before you decide who to hire.

 True, I believe the tri-state area which I want to invest generally needs to submit a plan to get the permit. 

Originally posted by @Leo Poon :
Originally posted by @Brian Pulaski:

@Leo Poon permitting and requirements are so area specific his answer would have no bearing on what you need to do (unless you invest in his area). Permitting can even be town specific. He probably was able to pull a permit as he was the property owner. I have always been able to on my owned homes. Letting anyone pull one may not be the case. It's best to know before you decide who to hire.

 True, I believe the tri-state area which I want to invest generally needs to submit a plan to get the permit. 

 I have done flips in the Tri-state area, CT and NY. This will still vary by town to town. There is no set standard that everyone follows. I have only ever had to submit a formal plan a couple of times. I drew the plans myself and no one questioned them. This again was because I spoke to the town before I started and asked what they needed.

Originally posted by @Brian Pulaski :
Originally posted by @Leo Poon:
Originally posted by @Brian Pulaski:

@Leo Poon permitting and requirements are so area specific his answer would have no bearing on what you need to do (unless you invest in his area). Permitting can even be town specific. He probably was able to pull a permit as he was the property owner. I have always been able to on my owned homes. Letting anyone pull one may not be the case. It's best to know before you decide who to hire.

 True, I believe the tri-state area which I want to invest generally needs to submit a plan to get the permit. 

 I have done flips in the Tri-state area, CT and NY. This will still vary by town to town. There is no set standard that everyone follows. I have only ever had to submit a formal plan a couple of times. I drew the plans myself and no one questioned them. This again was because I spoke to the town before I started and asked what they needed.

 Yes, it's always a good idea to ask the town's building department for the requirement first before rehabbing.